Home
In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Why Big Banks Are Like Drug Dealers

By Dan O'Malley





A banker explains why debt is an addiction and should be treated as such


JewishWorldReview.com | (USNWR) Are you addicted to your bank? If you're paying off credit card debt right now, the answer is more or less, "yes."

And you're not alone. Americans are paying $328 million in interest to banks every day. Every single day, just to keep from going deeper into banks' debt. Many in the personal finance blogosphere already view debt as an addiction, and, when you consider that gambling is now widely accepted to be an addiction, it's not a far stretch to see that getting things you can't afford with money you don't have could provide all the requisite habit-forming euphoria you need to become "addicted."

Kicking the Habit is Already Cool

Most Americans prefer to spend their money the debt-free way, with a debit card. It's true: debit card transactions outnumber credit card transactions 2 to 1. This a big part of why I left one of the biggest banks in the country, Capital One, to found a new company designed to deliver the best debit card in the world. I believe Americans who choose to spend their own money and avoid debt deserve to be rewarded. They're making smart decisions. Many of them have moved to debit in the last few years because the debt hangover they were feeling at the beginning of the recession was simply too painful to bear any longer.

Make no mistake: The rise of debit cards before and during the recession has improved the lives of Americans. More debit means less credit, and less credit means fewer families in debt. But it's bad for big banks. If they get fewer people into debt, they make less money.

Thanks to the Durbin Amendment, a new regulation reducing the amount big banks can earn on debit cards, these institutions need to adapt their business models. Guess what they're doing?

If you guessed, "Finding innovative new ways to add value and make a profit," you're wrong. If it weren't for the most vociferous public outcry in the history of fees, which happened last month, these banks would have standardized a fee for just using debit cards. What's the plan being hatched in the marble-clad offices of big bank execs this month? Push customers towards their most addictive drug--debt.

And big banks believe you're so hooked on them that you'll take it.

The Next Step: Getting You to Inhale

Yes, we all know by now that JP Morgan Chase, Citigroup, U.S. Bank, Key Bank and other major banks reversed their stance on charging debit card fees. And once those banks made their decision, even Bank of America had no choice, but to scrap their best laid debit fee plans. Don't be fooled. While the American people clearly communicated that they won't stand for a "debit card usage" fee, the only message big banks heard was that they need to find a less directly off-putting way to boost their profits.

This is the panacea in my industry: If internal problems cannot be solved, pass them along to the customer.


FREE SUBSCRIPTION TO INFLUENTIAL NEWSLETTER

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". In addition to INSPIRING stories, HUNDREDS of columnists and cartoonists regularly appear. Sign up for the daily update. It's free. Just click here.


Watch for interest rates on checking accounts to drop even further. Watch for new fees and increased fees on basic services. Even now, many banks charge a monthly fee on basic checking accounts, and banks like Wells Fargo already charge customers to use online bill pay if your balance is below $5000. It's inevitable. You will pay more or lose value from your checking account if you are with these institutions.

A little food for thought: If your bank is making your checking account more expensive but still offering you a "free" credit card every week, what do you think they're trying to motivate you to do?

Banks that increase checking account fees are trying to discourage you from spending your own money—from spending responsibly. They want you to spend on credit. Bank of America charges some customers $7 to maintain a checking account. Their credit cards are free. And keeping credit cards free isn't the only effort big banks are making to get you to take the risk of unsecured credit card debt.

The Endgame: Back To Credit Cards, Back to Debt Addiction

In the end, there's one thing big banks thrive on: increasing their customers' debt. When I was in my 20s, working at a big bank, I was paid to do exactly that. And I wasn't unique—there were lots of people like me who received bonuses tied to performance and profits. Think about it: How do you increase profits if you're a big bank? You lend more. You get people deeper in your debt. Once they owe you money they can't pay in full, you can bump up interest rates and siphon money out of them while they watch helplessly.

In the next few weeks and months, the credit card offers will get more enticing than ever before.

You'll be offered all sorts of "deals" for getting a new credit card. Watch for new offers for airline miles (rewards for debt). Introductory offers proclaiming 0 percent interest lasting longer than you'd expect ("free" debt). The messages will be delivered by more famous celebrities, with more appealing sign-up offers and grander visions of greener pastures than our current unemployment rates could support. You'll even be offered free checking that's only available if you have a credit card, loan, or mortgage. Don't believe the picture that big banking is about to paint.

New credit card offers have already begun landing on kitchen tables across America. According to the Wall Street Journal, 59 percent of the offers made for new credit cards in the first four months of 2011 included an incentive, compared with 30 percent during the same period of 2007.

How hard are they pushing?

An industry analyst recently predicted a total of 5 billion credit card solicitations will go out in total this year. That's almost twice as many as last year and nearly four times as many as the year before. You don't have to be a banker to see where this is headed.

In case anyone is thinking that credit cards really aren't so risky, you should know that roughly half the families in this country are in credit card debt. If the dinosaurs had as much credit card debt as we do now, and they paid a dollar per hour to get out of debt, they'd still be paying today, because it would take about 115 million years to pay it all off.

Being in credit card debt is something you can't shake. No matter how you change your behavior after you've dug yourself in, credit card debt can haunt you for decades. It's like being addicted but it's worse, because there's no patch for this. There's no gum. If you're mired in debt, the bank owns you… fully.

You Hold the Power to Extinguish a Broken System

Let me be very clear: You do not have to accept this system, You have the power to create change. Just look at how many banks backtracked on charging debit fees. They didn't do this out of the goodness of their hearts—they did this because you made it clear you were not going to accept it.

Let's talk about what else you can do.

Banks are losing revenue right now and their response is to ask you for more fees and debt. Just like your parents told you about any addictive drug—Just Say No.

Move your accounts. Make a switch to a smaller institution that's not impacted by Durbin. Do not let banks push you away from debit cards, and absolutely do not get duped into moving to credit cards if you're a debit user. Believe it or not, I'm not the only CEO trying to change the system. Alternatives to big banks exist. When you move to something better—something you feel good supporting—you are declaring your independence from a broken system. You should feel proud.

In 1994, tobacco company executives testified before Congress that cigarettes weren't bad for your health. The unbelievable brashness of this claim—they thought we would believe it?—woke the country up. Afterwards, 10 million people stopped smoking. In 1998, executives from those same companies again testified before Congress that smoking may, in fact, cause cancer.

Don't let yourself be trapped in bank products that make your life worse. Crush the pack. You have the power to change the system. Ten years from now, you will be able to look back at this moment as the time when we all woke up to our debt addictions. This is just the beginning.

Sign up for the daily JWR update. It's free. Just click here.

Interested in a private Judaic studies instructor — for free? Let us know by clicking here.

Comment by clicking here.

Dan O'Malley is CEO and cofounder of PerkStreet Financial. He was formerly an executive at Capital One.











© 2011, US News & World Report